Market equilibrium rates of interest are rarely expected to approximate efficient interest rates between willing transactors of exchange

An income tax in which the average tax rate increases with income is called a

A) regressive income tax. B) proportional income tax. C) flat-rate income tax. D) progressive income tax.

Suppose there are two types of bonds (one-year bonds and two-year bonds) and that the yield curve is initially upward sloping in period t. Note: For this question assume that: (1 ) expected inflation is zero; and (2 ) the relevant interest rate on the vertical axis of the IS-LM model is the one-year interest rate. Based on our understanding of the IS-LM model, of the yield curve and of financial

markets, we know with certainty that an announcement in period t of a partially unexpected future increase in taxes (to be implemented in period t + 1 ) will have which of the following effects? A) stock prices will increase in period t B) stock prices will fall in period t C) the yield curve will become steeper in period t D) none of the above